Ron Paul to Fed: All You Can Do is Print Money – And It Doesn’t Do Any Good!

In response to the media’s outrage at Republican efforts to strip the Federal Reserve of its mandate to keep unemployment low, Ron Paul derided the Fed as an “atrocious organization” and said it should stop pretending it can deal with unemployment. All it can do is print money – and it doesn’t do any good!

Date: 11/17/2010

Transcript

Host: Congressional Republicans are pushing to strip the Federal Reserve of its authority to address unemployment. Obviously this is coming at a critical time. The lawmakers want the central bank to stop worrying about the jobless crisis and focus just on insuring stable prices. Congressman Ron Paul joins me now. It’s good to see you, thanks very much. Why? Why is this an idea that is out there now?

Ron Paul: Well, mainly because central economic planning doesn’t work. All central economic planning fails, and to give it to a body like the Federal Reserve to do central economic planning, unemployment and prices and money supply is an absurd idea. It was never intended to be that.

Host: But that’s in there charter. There are two things that their job is in there charter. One is to reduce inflation and one is to focus on jobs.

Ron Paul: But it’s not in the Constitution. That’s the big difference. We do a lot of things up here, probably 90% of the things we do up here are not in the Constitution.

Host: But it’s the purpose for which it was created and there also has been a long tradition, I mean, sort of a hallmark of the Federal Reserve is that it was outside of Congress, it was outside of the press. This is an independent organization.

Ron Paul: Yeah, that’s a very bad idea. No, they were established to be the lender of last resort, and that’s moral hazard. That means you can do anything you what, loan money, get into all kinds of trouble, create bubbles, and the Fed will always be there to print the money you need. If the money is … If they need money to fight a war, print the money. If they need money to run the welfare state, even if you don’t tax people, print it out. It’s an atrocious organization.

Host: Is the Fed the problem or is Congress the problem, is Washington politics the problem and the money that’s being spent?

Ron Paul: Indirectly it’s not the Fed, because the Fed is created by the Congress. But the people allowed the Congress to do it. They’re derelict in their duty to allow this to happen, and for a long time they got away with it, but the bubbles come from the Fed, the depressions come from the Fed, the inflation comes from the Fed. And people are waking up, the last two years … I mean, there’s been a tremendous enlightenment with the people about the danger of the Federal Reserve pretending that they can deal with unemployment. All they know how to do is print money, and it doesn’t do any good. That’s what these last 2 years have proven.

Host: In the deficit reduction committee, which came out with a plan that a lot of people have bristled about on both sides, depending on what their particular interests are. Is there an argument to be made, congressman, that, “Listen, you’re in Congress, address the problems that Congress has, address the spending problem, address the budget problem, address the deficit problem, and leave the Fed as an independent organization.”

Ron Paul: Well, you can’t do it, because the Fed is the mischief maker and the Congress is derelict because the Fed is always there to bail them out. So no, you can’t deal with central economic planning unless you deal with the Fed. It’s up to the Congress, you’re right about that, the Congress should cut the spending and not do the things they’re not authorized to do and it would be … I mean, get out of all the illegal wars and get out of the welfare business, and you’d have all the employment you want. Just think of these trillion dollars we spend a year overseas, just think if it was in the economy. And get rid of the income tax, now that’s good economic planning, as far as I’m concerned.

Host: Is there anything realistic about this proposal, congressman, and I say that because when you hear what people on both sides and they were campaigning over the last many months and they said, “You know, we’ve got to get spending under control, we have to get the deficit under control,” and then the deficit reduction committee comes out. And, of course, they want to still have money for certain projects that they want. Is it realistic to even bring this up?

Ron Paul: It’s not if they think it’s a budgetary problem. It’s a philosophy-of-government problem. If the people endorse the principles that we need to run an empire and we’re going to run a welfare state, and we’re going to have a central bank inflating the currency to plan the economy, no, it’s not going to work. It’s not a budgetary problem, the budget is a symptom of this disease. The people have to ask, “What should the role of government be?” The founders asked that question and they detested the king’s idea of a royal government, so we got rid of the king. If we introduced some new ideas, the ideas of liberty and independent people who, you know, would have an incentive. But today people have grown soft and dependent and believe government can bail them out. But there’s an awakening and that’s what the Tea Party Movement is all about. The people are realizing government can’t do it. They fail at just about everything they do, they fail at monetary policy, foreign policy, fiscal affairs. But it’s not budgetary. You can’t just tinker on the edge of what … we have to come up and save waste and fraud and tinker here and there. We have to ask, “What should the role of government be?” and there’s a good guide, it’s called the Constitution. You know, they tell us what we’re allowed to do. Article 1 section 8, everything in there that we’re allowed to do.

Host: Alright. Well, congressman, thanks for coming over. A very controversial proposal there for the Congress to get involved with the Fed. Thank you so much for coming in.

285 Comments:

I'm simply pointing to the fact that purchasing power has diminished prior to Nixon's revoking of the gold standard. More generally, there is no multiplicative effect within a 100% reserve system. FRB increases money supply out of necessity. A tight money supply under 100% reserve would limit trade to actual value and our debt-based system would vanish. Good thing I know, but trade would slow dramatically.

I'm simply pointing to the fact that purchasing power has diminished prior to Nixon's revoking of the gold standard. More generally, there is no multiplicative effect within a 100% reserve system. FRB increases money supply out of necessity. A tight money supply under 100% reserve would limit trade to actual value and our debt-based system would vanish. Good thing I know, but trade would slow dramatically.

I actually agree with that line of thought 100%. Again, I don't advocate a Central Bank. I'm simply pointing to the implicit fraud within the banking industry. This could be adjusted and banking could continue without the need for a "lender of last resort" or even deposit insurance. I also favor shifting taxation away from income, sales and payroll to severance, pollution and land. That's another issue. It's where I separate from anarchism in a big way.

I actually agree with that line of thought 100%. Again, I don't advocate a Central Bank. I'm simply pointing to the implicit fraud within the banking industry. This could be adjusted and banking could continue without the need for a "lender of last resort" or even deposit insurance. I also favor shifting taxation away from income, sales and payroll to severance, pollution and land. That's another issue. It's where I separate from anarchism in a big way.

FRB was the beginning of the banking industry at the very beginning of the Enlightenment, under the Medici family who were allowed by the church to charge interest on loans. This soon spread to all of Europe. The Rothchilds, for instance, built their entire fortunes on FRB. Gold was simply the unit-of-measure. Should on-demand deposits be backed 100% by reserve, or are receivables OK? That's the issue.

FRB was the beginning of the banking industry at the very beginning of the Enlightenment, under the Medici family who were allowed by the church to charge interest on loans. This soon spread to all of Europe. The Rothchilds, for instance, built their entire fortunes on FRB. Gold was simply the unit-of-measure. Should on-demand deposits be backed 100% by reserve, or are receivables OK? That's the issue.

"or the fractional reserve system, where you print money that isn't backed up by gold"

Fractional RB existed before the Federal Reserve did of course. You're right that central banking existed prior to that via Hamilton and the Federalists. Banks issue loans, then use those loans as assets to issue additional loans against, increasing the money supply. Most currency is issued in this way, or used to be as of 19th century. It's called "banking privilege".

"This is why the state must be limited as much as possible. It's why we have a Constitution"

I'd need to know "which" constitution you're talking about... the 1791 version or the current document. Nevertheless, it is evident that the present USC has done a poor job of providing limits on gov't. All this decrying of "unconstitutional" acts should be an issue for the courts, per the USC, not legislative punditry. Art 1 Sec 8 isn't very limiting.

"This is why the state must be limited as much as possible. It's why we have a Constitution"

I'd need to know "which" constitution you're talking about... the 1791 version or the current document. Nevertheless, it is evident that the present USC has done a poor job of providing limits on gov't. All this decrying of "unconstitutional" acts should be an issue for the courts, per the USC, not legislative punditry. Art 1 Sec 8 isn't very limiting.

The gold standard, and fractional reserves, are two separate issues. It is banks, not gov't, that issues the most currency in our system. Loans made on A/R "assets" are a pyramid of promises. I'm sure you realize that. Using a 100% reserve system is ethical, but consider that it would be the tightest of money supplies. Purchasing power would not be multiplied as you suggest... I suspect. Still looking into it.

MSNBC Executives: We can't let this man on television again and since I own the media owners, do what I say. He can't be beaten in an argument. He will expose the false left/right paradigm that we bankers masquerading as Zionists have used to steal America's wealth and set up a police state. DON'T LET HIM ON TV AGAIN. Sincerely, Evelyn de Rothschild. London 12/5/2010.

Money is Debt. Under fractional reserve banking, private issues of currency happen all the time and can occur in spite of a Central Bank. A CB is a hedge against bank runs and other downsides to the implicit FRAUD of FRB.

Taxation ultimately defines the value of a national currency. All money created by the FED is based on US Securities i.e. taxpayers. Establishing a gold standard doesn't prevent this pyramid scheme of "banking privilege", and neither would nationalization of the FED

Mr. Paul I haven't figured out if your surrounded by Jesus' angels or if you are one but I sure am glad we have you in congress. Wish my state of Massachusetts had a congress person like you we could be proud of. Sadly its all anti- Constitutional mafia here. Thank you for all you do.

Disclaimer

RonPaul.com is maintained by independent grassroots supporters of Ron Paul. Neither this website nor the articles, posts, videos or photos appearing on it are paid for, approved, endorsed or reviewed by Ron Paul or his staff.